FIFI PETERS: Fully electric cars can seem like an unlikely dream to most South Africans, especially when you think about loss of charge and your car stalling because you don’t have the power to charge it. But the future is electric, and the cars of the future will not look like the ones we drive today, due to the push to reduce pollution in the atmosphere. This is why recent government changes in our energy market and in our ports are so important to South Africa’s electric car ambitions.
Paul Boynton, CEO of Old Mutual Alternative Investments, now joins us to learn more about this conversation. Paul, thank you very much for joining the program. Just explain to us why exactly the transformation of our energy and perhaps our ports is so important to South Africa’s electric car ambitions.
PAUL BOYNTON: Fifi, thanks for inviting me to your show and hello to your listeners. I think what is driving the transition to electric vehicles globally is obviously the implicit greenhouse gas emissions from the common cars we drive, which are powered by gasoline or diesel.
Transport as a sector worldwide is responsible for around 15% of carbon emissions. Right now, there are about 50 billion tons of carbon going into the atmosphere each year. In terms of the global agenda, we need to reduce that 50 billion to zero by 2050. It is a huge task. And if we can do it, then we will meet the Paris goal of containing global warming to 1.5 degrees Celsius since pre-industrial times. So, I think ‘let’s move on to electric vehicles’ is part of that agenda.
As you suggested, in South Africa it is nascent and we have not been here yet. But if you look globally, we are seeing a lot of activity in other markets. Everyone will have read about Tesla’s rapid growth in terms of market capitalization compared to the other traditional automakers out there. If you look at a country like Norway, for example, at the moment more than 50% of the cars sold in Norway are electric, pure electric and another 20% are hybrids.
So the traditional cars that we buy here in South Africa today largely account for only 30% of what is sold in Norway right now. Even in Germany, electric vehicles today represent 10% of the market.
FIFI PETERS: Just to add perhaps to what you’re saying, and the fact that our electric car market is really nascent, we need to catch up and catch up quickly, given that the countries we supply have spoken out on the type of costs that they will accept in their markets, and it is not the type of cost that we are giving them today.
So my question to you is: how quickly do you think investments in the sector will start to arrive as a result of recent pronouncements on energy regulation and port efficiency?
PAUL BOYNTON: I think these problems are connected to some degree. So the ability of companies to embark on a kind of integrated power generation, where they can build renewable energy or electrical installations of up to one hundred megawatts and …… [4:15] over the grid and essentially providing its own power source, I think it’s great for two reasons.
The first is that we have a challenging electricity generation situation right now with Eskom under pressure. Some of the big industrial buyers are capable of creating self-sufficiency and that is useful for everyone; improves the reliability of network balancing. Obviously for something like a mine, and a lot of the activities we’ve seen come up because of this has been outside of places like the mining sector, a mission-critical power that is continually available if you have people on the ground. and a 24/7 operation is very important.
The other big problem for us as a country is that, with this climate issue on the agenda, we will see, in my opinion, an increasing focus from the developed world on the carbon footprint of everything. So if you supply a car to Europe in the future, I predict that the carbon footprint implicit in the production of that car will become a problem for governments in Europe and potentially certainly for consumers in Europe. People will increasingly assess where they spend their money based on the concomitant impact on the environment.
So I think it’s important for us in South Africa to look at what our energy mix is like. If you look at it, for example, Amazon has made a global commitment to be carbon neutral by 2030; It could be 2025. In South Africa, they have sought to acquire renewable energy for their energy footprint in South Africa. It has also seen large corporations globally make these commitments, to become carbon neutral at different time horizons.
FIFI PETERS: Briefly, where does South Africa currently play in the global electric car value chain?
PAUL BOYNTON: As you mentioned, 60% of our car production is exported, and I think we should see this as an opportunity rather than a threat. Obviously the motor industry here has developed thanks to, I suppose, very clever government incentives and alliances with the industry over time. But if the government makes decisive progress on this issue, I believe that we can create a space for ourselves in the value chains of the electric vehicles of the future.
The other thing we need to keep in mind is that the African Continental Free Trade Agreement, which is trying to make Africa more united from a commercial point of view, is also a great opportunity for us, and looking at Africa as a market. future, too, for things like cars.
Certainly we are seeing a bit of competition for ourselves, which is perhaps a good thing, but Nigeria is trying to develop its car market. Rwanda recently closed a deal with VW to start assembling electric vehicles in its country. So I think this is something we should focus on, given that the auto industry accounts for about 7% of GDP, and it is a huge contributor to our economy, it is a large employer directly and indirectly.
We have done a good job. Our cars are classified worldwide. So I think this is an opportunity for us to move into a new space, convincing them here to be a leader. But we have to move because we are a bit behind in a sense with our own market. All countries have developed electric vehicles in their national markets by providing tax incentives for the industry to function on emissions. So I think that’s something the government here needs to consider as well.
FIFI PETERS: Of course. I like your play on words, which was probably unintentional, that we have to move if we are to take advantage of this opportunity these changes have presented us, Paul.
We will have to leave it there for now. Paul Boynton, CEO of Old Mutual Alternative Investments.